2019 (11) TMI 671 - AT - Central Excise

Benefit of exemption under N/N. 6/2003 - Procedural lapse - relevant date for calculation of benefit of notification - from which date KPCL is entitled to the exemption notification? - principles of unjust enrichment - HELD THAT - KPCL filed an application for availing the benefit of Notification on 04/03/2003 itself but the Department wanted certain clarification as to whether the validity of the certificate issued as per Section 44 of the Indian Electricity Act, 1948 is still valid and the same was also verified vide letter dt. 24/04/2003 and 09/05/2003 - also except for this clarification, there is no dispute regarding the eligibility and other conditions to be satisfied by the appellant. Once the clarification was given by KPCL and finally edibility certificate was issued, the said certificate relates to the date of application i.e. 04/03/2003 filed by KPCL. The contention of the Revenue that KPCL is entitled to the exemption notification from 08/07/2003 is not tenable in law. The Commissioner(Appeals) has not considered the legal submissions submitted by the appellant whereas the original authority has relied upon certain decisions but the said decisions are distinguishable inasmuch as the ratio of those decisions was as to how the notification has to be interpreted. But whereas in the present case, eligibility to benefit of the notification is not in dispute and therefore the strict interpretation of the notification is not to be followed because once the appellant is found to be eligible for the benefit of the notification thereafter liberal procedure to be followed, is permissible - the substantive benefit should not be denied for procedural infractions Unjust enrichment - HELD THAT - Appellant has also established that the incidence of duty has not been passed on to anyone else. Further, the duty amount borne by KPCL has been reimbursed by the appellant and such amount has been show as loans and advances in the books of accounts which clearly shows that the duty amount has not been shown in the income and expenditure in the balance sheet. Hence, duty burden does not arise since the refund amount claimed will be adjusted towards loans and advances. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of refund application by the Commissioner (Appeals)
- Eligibility for exemption under Notification No.6/2002-CE
- Date from which KPCL is entitled to the exemption notification
- Consideration of legal submissions and documentary evidence
- Denial of substantive benefit for procedural infractions

Analysis:
1. Appeal against rejection of refund application by the Commissioner (Appeals): The appellant, a public sector undertaking engaged in electricity generation, appealed against the rejection of its refund application by the Commissioner (Appeals). The case involved the eligibility for exemption under Notification No.6/2002-CE, which exempted Naphtha and LSHS from excise duty subject to specific conditions.

2. Eligibility for exemption under Notification No.6/2002-CE: The Tribunal noted that the appellant was eligible for the benefit of exemption under Notification No.6/2003. The key issue was determining from which date the KPCL was entitled to the exemption notification. The lower authority had contended that KPCL was eligible from 08/07/2003, but the Tribunal found this argument legally untenable.

3. Date from which KPCL is entitled to the exemption notification: KPCL had applied for the benefit of the Notification on 04/03/2003, and after providing necessary clarifications, the eligibility certificate was issued based on the date of application. The Tribunal rejected the Revenue's argument that KPCL was entitled to the exemption from 08/07/2003, emphasizing that once eligibility is established, a liberal interpretation should be adopted.

4. Consideration of legal submissions and documentary evidence: The Tribunal criticized the Commissioner (Appeals) for not properly considering the legal submissions and documentary evidence presented by the appellant. It highlighted that the strict interpretation of the notification was not necessary when eligibility was undisputed, citing relevant legal precedents for a liberal approach.

5. Denial of substantive benefit for procedural infractions: The Tribunal emphasized that substantive benefits should not be denied for procedural infractions, citing various legal decisions supporting this principle. It noted that the duty amount reimbursed by the appellant to KPCL was treated as loans and advances, indicating that the duty burden had not been passed on to others.

In conclusion, the Tribunal found the impugned order unsustainable in law and set it aside, allowing the appeal of the appellant. The judgment was pronounced on 14/11/2019 by the Appellate Tribunal CESTAT Bangalore, with detailed analysis and considerations regarding the issues raised in the case.